The listed cement manufacturer PPC Zimbabwe Limited expects to complete the repayment of its old debts in the coming financial year.
PPC Zimbabwe had accumulated $ 21 million in debt due to cash flows generated in the country by overseas companies that could not be returned to overseas suppliers due to foreign exchange constraints.
“Management expects the debt to be repaid in full in FY22,” said Roland van Wijnen, Chief Executive Officer of PPC Africa Group, in his FY21 report.
The cement manufacturer’s debt repayment was increased by a move by the Reserve Bank of Zimbabwe (RBZ) in 2019 to take over old foreign debts.
In that regard, PPC said it managed to repay $ 11.2 million in the past fiscal year.
“The Reserve Bank of Zimbabwe continues to meet its obligation to settle the debts of PPC Zimbabwe from old funds with a further 11.2 million US dollars in fiscal year 21,” said the CEO.
Meanwhile, the Zimbabwean subsidiary was hit by inflationary pressures despite improved sales volumes in FY21.
“Despite the challenging economic environment and the effects of the lockdown restrictions imposed by Covid-19 on sales, the cement volumes of PPC Zimbabwe increased by around 10 percent, supported by ongoing infrastructure projects. PPC raised prices in local currency to offset input cost inflation and local currency devaluation, ”the group said.
Sales of PPC Zimbabwe fell by 13 percent to R 1,623 million from R 1,861 million in the same period before.
Management said the impact of hyperinflation accounting and the 75 percent devaluation of the Zimbabwean dollar against the South African rand reduced PPC Zimbabwe’s contribution to the group’s financial performance.
However, in functional currency terms, PPC Zimbabwe sales grew 251 percent.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) in South African rand decreased 32 percent to 481 million.
In functional currency, EBITDA rose 173 percent to $ 718 million from $ 994 million a year ago.
Management claims the Zimbabwean business will be focused on receiving cash but also believes it is financially secure.
“Given the prevailing economic conditions affecting the value of the Zimbabwean dollar, PPC Zimbabwe is focused on maintaining cash and maximizing US dollar EBITDA,” said van Wijnen.
“The company is financially self-sufficient and in December 2020 declared and paid a cash dividend of $ 4.4 million to PPC. After the year ended, another dividend of $ 2.6 million was paid to PPC. “
In terms of the broader group’s performance, revenue increased 3 percent year over year to $ 625 million from $ 607 million in the same period in 2020.
Consolidated EBITDA rose 16 percent from $ 96.6 million to $ 112 million.